By Alex Tarrant
Standard and Poor’s decision to put New Zealand’s AA+ rating on negative watch has sparked a blame game between National and Labour as to what led the rating agency to make its surprise move.
The Labour Party expectedly laid the blame at the feet of the National government, saying its inability to solve New Zealand’s poor savings problem was the root of the cause.
Meanwhile, National says changes in the international situation – it cites Ireland’s problems as the main culprit – led S&P to change how it assessed private sector risk, and, seeing as most of New Zealand’s external debt is owed by the private sector, that was what caused S&P to make its move.
In the red corner
Labour Party finance spokesman David Cunliffe said the government had failed to solve New Zealand's private sector debt and savings problems.
"Standard and Poor's has been very clear that National has failed to deliver on two crucial economic fundamentals: closing the yawning domestic savings gap and closing down New Zealand's growing international debt, with Treasury forecasting the current account to return to unsustainable levels," Cunliffe said in a statement.
"Because that debt is overwhelmingly private debt, the Government cannot solve the problem simply by trimming its own budget,” he said.
Labour Party leader Phil Goff told journalists this morning the problem stemmed from government cutting Kiwisaver, and halting superannuation contributions to the 'Cullen Fund'.
"It’s about inadequacy of savings," Goff said. "This government cut savings through Kiwisaver, cut savings through the Cullen scheme."
"What the credit agency has said is that this country is not saving enough. If you need to save more, then your first action ought not to be to cut the programs that actually encourage savings," he said.
Goff then pointed to the government deficit, which expected to be around NZ$13.3 billion this year. "After 15 years of a government running a surplus, we’ve had two years of deficit, and contributing to that deficit was NZ$14 billion in tax cuts. The government has to take responsibility, it has no plan, and that’s reflected in that credit downgrade,” he said.
And in the blue corner
Finance Minister Bill English shrugged off Goff's comments as "nonsense". He said the issues S&P raised were being focussed on by the government, and that the agency had previously essentially endorsed the government's policy program.
"I think what’s happened is that because of the Irish bailout, the financial markets, where we borrow billions of dollars a year, are more sensitive to how much debt countries have," English said.
“New Zealand has one of the highest rates of external debt in the developed world, so they’re getting a bit more sensitive about that," he said.
Asked whether the move would raise the cost of New Zealand's overseas borrowings, English said the negative outlook was a warning. "Over the next few years you are going to see developed country governments borrowing enormous amounts of money and we’ll be out there competing with the UK, and the US will be borrowing hundreds of billions, and it would be better if we weren’t [having to compete with them]," he said.
"It would be better if we had less overseas debt, and this is a bit of a warning that over the next few years it could get a bit tougher, but the agency essentially endorses the government’s policy program - they think we’re roughly on track.
"I think we’ve been making more progress than they do," English said.
Shouldn't govt lead by example?
English was asked whether the government should be leading by example by cutting its debt. He said, on the one hand government could see the need to increase national savings, but on the other hand it had been determined to cuishon the economy through the worst of the recession.
"That phase [of cushioning the economy] is really over now," English said. "This will be our biggest year of cushioning the recession – we’re borrowing about NZ$13 billion to pump into the economy. We’re looking ahead to the next phase which will be about government improving its own performance," he said.
"One of the things [the Savings Working Group is] likely to say is the government needs to improve its own savings performance. At the moment we’re running a very large deficit, and I’m sure they’ll tell us, as Treasury’s telling us, we need to rein that deficit in reasonably quickly over the next three or four years."
"Government debt will be increasing for the next three or four years while we’re still running deficits, but those deficits need to shrink from here on. This kind of comment from S&P is simply a warning that the world financial markets where we borrow money, both the government and households through the banks, are pretty sensitive to debt levels," he said.
"If there [are] further problems behind the Irish bailout, and Europe, then they’ll become more sensitive."
Should we be listening to Standard and Poor's given the critisism it received over the subprime crisis in the US?
Asked whether we should listed to, or trust S&P given its track record in the run up to the US subprime crisis., English said, "the ratings agencies have views that are important to the people that lend us money, because people who lend us money listen to the rating agencies."
Odd statements from S&P
An odd aspect about the S&P announcement was that bank credit in New Zealand was "pretty sound and been improving," English said.
"There’s been some international concern about whether the Australian banks might be dealing with a housing bubble. That’s arguable - that if something dramatic happened in the Australian housing market that could affect the stability of our banks," he said. "I don’t think anybody regards that as a realistic possibility."
"Those statements are a bit of a puzzle. Twelve months ago you could understand it, 12 months later, the banks are in a better position, the New Zealand government’s in a better position, that’s why the statements are a bit of a puzzle,"
Quake, SCF bring NZ to world's attention for wrong reasons
The Canterbury earthquake and failure of South Canterbury Finance had brought New Zealand to the attention of international markets for the wrong reasons, English said. "Nothing’s really changed here. There have been a few problems like the earthquake and South Canterbury [Finance], but those are manageable."
"What has changed is that the international financial markets have just become more sensitised to how much debt countries have, because of the Irish bailout and the potential for more problems in Europe," he said.
"As it happens we have one of the highest levels of external debt in the developed world, alongside countries that are getting a lot of attention now, like Portugal and Ireland and Greece."
We're all in this together
English was asked whether the cost of the government's borrowing was being held to ransom by high private sector debt, seeing as the government thought S&P's announcement was due to debt levels in the private sector and not government debt.
"We’re all in this together," he said. "So the performance of the government is important, but equally the changes in the way New Zealanders are spending and saving are important.
"The good news is New Zealand households are changing their ways, we’re yet to see if that’s permanent. The government’s got more work to do to change its ways to reduce its spending," English said.
See Prime Minister John Key's comments yesterday on the move here.
Is it a verdict on government policies?
Later in Question Time on Tuesday, Cunliffe questioned why S&P had made its move. This from the uncorrected transcript:
Hon David Cunliffe: Does he still maintain that the removal by Standard and Poor’s of the negative watch following his 2009 Budget was a “verdict” on that Budget; if so, does he now admit that downgrading the outlook can only be a verdict on the policies he has implemented since that date?
Hon BILL ENGLISH: To the first question, yes; in respect of the second question, no. Most people who have observed this situation are a bit puzzled. In fact, last year we had conditions where the statement that Standard and Poor’s has made might have been warranted, but most of the imbalances it refers to in the statement are better now than 12 months ago, when it lifted the negative outlook.
Here is Labour Finance Spokesman David Cunliffe's statement below titled "National fiddles while credit rating outlook burns." It was made after Standard and Poor's put New Zealand's credit rating outlook on negative and Prime Minister John Key responded by saying S&P was reacting to international market turmoil.
Standard and Poors have decisively rejected National's economic approach by returning New Zealand's sovereign credit rating to negative watch after just eighteen months at neutral, says Labour’s Finance spokesperson David Cunliffe.
"After 18 months of empty growth projections, broken promises and unaffordable tax cuts, National has no-one to blame but itself," David Cunliffe said.
“Standard and Poors is clearly worried that updated forecasts due to be released next month will show growth forecasts being revised downward.
"Standard and Poors has been very clear that National has failed to deliver on two crucial economic fundamentals: closing the yawning domestic savings gap and closing down New Zealand's growing international debt, with Treasury forecasting the current account to return to unsustainable levels.
"Because that debt is overwhelmingly private debt, the Government cannot solve the problem simply by trimming its own budget,” David Cunliffe said.
“Strong action was required to lift economic growth and tax receipts, targeting tax cuts where they were needed at the same time as dealing with New Zealand’s savings problems. Instead, National's tax cuts pandered to its wealthy constituencies and added billions to public debt, much to Standard and Poors’ dismay. National also cut KiwiSaver and suspended contributions to the Super Fund.
"It has taken a gob-smacking two years to even set up a committee to look at the massive savings gap that Labour has consistently highlighted as a crucial need.
"Even before the Savings Working Group started, Bill English ruled out Australian-style strong savings policies, despite evidence that Australia's huge local savings pool has been a key driver of growth and rebuilding,” David Cunliffe said.
"Meanwhile the Government's economic growth policies have been laughable --- like the cycleway to nowhere or mining national parks --- or non-existent such as the complete vacuum of economic development policies in key sectors and regions. "Like a possum caught in the headlights National's monetary policy has been frozen in outdated free market orthodoxy, while all around us global financial markets are in turmoil and local manufacturers wither on the vine facing a rapidly rising Kiwi dollar," David Cunliffe said.
"Little wonder business tax receipts have plummeted 22.4 percent below latest forecasts and confidence is low, despite a 30 year record high in commodity prices. Little wonder Standard and Poors have concluded National's economic medicine is not working. "Eighteen months after National trumpeted Standard and Poors’ earlier re-rating, National has squandered its chance, its economic reputation is in tatters and it has no-one to blame but itself," David Cunliffe said.
The New Zealand Manufacturers and Exporters Association later sent out this release on the the S&P issue:
Policy changes are needed to cure a declining foreign debt position say the New Zealand Manufacturers and Exporters Association (NZMEA). Standard and Poor’s has put New Zealand’s credit rating on negative outlook. Treasury Secretary John Whitehead has already commented that the Government needs to move into surplus faster than is currently forecast and this advice needs to be heeded.
NZMEA Chief Executive John Walley says, “John Key’s statement that ‘nothing has changed’ is precisely the problem. Although import consumption has dropped through the recession, the same old policy settings that encourage consumption rather than production are still there; we are not giving our exporters the motivation to earn our way out of trouble.”
“We have a policy framework that has caused New Zealand to have some of the highest interest rates in the world, attracting foreign capital, and tax distortions that encourage consumption fuelled by asset backed borrowing.”
“While these conditions remain we cannot expect a different result than the one we have seen for the past decades of ever increasing foreign debt.”
(Updates with NZMEA comment, more from English, Goff comments)
93 Comments
We won't venture into a full description of Cunliffe and his Socialist mates who proved themselves incapable of running a boozeup in a pub...for 9 awful years....let's just have a look at his solutions to the debt crisis Labour saddled NZ with.....let's have the solutions please Cunliffe....we're waiting...................................................just one....you do have solutions don't you......where the hell has he run off to?
Spot on Wally !! People who live in glass houses and all that.
I just interpret this as S&P giving a bad rating for all socialist and Keynesian economic parties (both of which Labour and National are).
The irony is of course that the US with the AAA+ rating is falling apart at the seams, while the relatively better-off countries get a lower rating. I'm starting to think that a bad rating is actually a good thing !!
We didnt bribe S&P obviously. The second S&P or Moody's thinks its time to downgarde USA just wait for the "un-american" statements to come thick and fast.....meanwhile it looks good for them to hammer us.....makes ppl think they actually do something.....
regards
Careful how you heap scorn on the heir apparent there Wally ....for when he's pumping your tax dollas into the SIS ....he may well have them pump you just for the hell of it...they may even arrange a little foreign affair for you at the end of a chain and anchor.
Yes David....Kun Li...the Running Kun will have his moment in the glare of the bright lights that emanate from the hive of the illustrious....the mantle of illumination that guides we poor shmucks through uncharted/unchartered seas amidst a fog of infinite gloom and despair.
And if you believe that perhaps I could interest you in some futures stocks.
Thanks Alex looking forward to the dissection process that is sure to ensue......is it wise for Goofy to comment on such matters....other than to reiterate that "He" is still leader and Cunny had to get the Big Red Seal before going public with a response.
God their worth every penny ........don't you think..?
Remember folks , the election is only 12 months away , so the Back-to-the-Future Labour Party are in attack mode . And given how gullible Kiwis are to political bribes / finance companies / Nigerian internet scammers , I'd say that Goofy / Klinger & Cunny have a real chance of toppling JK & Wild Bill .
JK sat on his hands for so long during the GFC , that his fingers developed fart burns . Only got himself to blame for repeatedly assuring the electorate that he wouldn't touch their welfare " entitlements " , whether it be the pension , WFF , state housing , interest-free-student loans ............... All are government guaranteed ........... As are leaky home owners / SCF / un-insured earthquake victims / kiwifruit farmers / .................
Sadly for such a beautiful little country , National and Labour are taking turns at rooting its economy .
Cripes GBH...you tell that to my new horse Philly...he's all teeth n legs but he's just itchin to get hitched to that buggy I've got on lay-by at the Farmers Co-op.....I aint gonna let the cow pats grow under my feet till they overtake my body nosireeeeeebob.
having said that...
You do know the two lads you poke are good people who are at least committed to what they believe.............? not just malcontents venting as a form of self relief.....they come with an agenda and I'm ok with that.
"Goff told journalists this morning the problem stemmed from government cutting Kiwisaver, and halting superannuation contributions to the 'Cullen Fund'."....no it didn't you twerp Goofy..it stems from you and your socialist mates buggering the task of managing the economy for 9 bloody years.....get it through your head Goofy, you blew it.
You splurged in the state sector....you wasted the potential to boost the export sector and create real employment...you put our money on a bet that encouraging the property ponzi bubble would keep you and your useless mates in power snouts deep in the public trough....and when the recession started..it started here goofy...in poorly managed Noddyland. Do us all a favour and bugger off....that's what the Mana voters have just told you.
Time for our politicians to grow some balls.
Monetise the debt, print debt free money AND cut spending, introduce "transaction accounts" escrowed from banks balance sheets and limit the Govt guarantee to the sum in these accounts. Tell the bankers where to get off.
Our dollar plunges, and austerity/inflation is self induced, we take our own medicine. There's no such thing as Keynsian stimulus it doesn't work but at the same time there is no need for the Government to borrow money when it's spending in it's own fiat.
Otherwise it's just like the Irish, the IMF bailing the banks out using taxpayers money.
The solution is so straight forward. Why isn't it adopted?
Well it's like this Fred...turn your printer on..run off some monopoly notes and go fill your tank with diesel or gas..now try paying for it with your special money..
The debts have to be paid by those who borrowed the credit..whether that be our stupid govt or any of the morons who borrowed all they could from a bank to splurge with. The banks have to cop the losses when the loans go bad. The govt loans mean you carry the can.
To repay the debts and see off the housing debts will take two decades at least...if things go well.....if not, expect the effluent to get deeper.
Ok so that's the objection.
Any deficit run up by the Government is additional monopoly money in circulation until it's mopped up by issuing treasury bonds.
I'm not suggesting that this is a means of repaying debt. All it does is remove the Government from the equation and leaves the banks and their customers holding the can, rather than the taxpayer.
The Govt has to provide a "safety valve" and a backstop in the event of bank failure hence the transaction accounts.
I see the issue with trying to explain it, I've thought about it long enough and am happy to stick to it as a constructive solution. It's easy to dismiss ideas as hogwash but in reality I'm only saying that we should do our own quantitative easing. The difference is that the QE should be a permanent operation and when surpluses are returned by the Govt the opposite happens, Quantitative uneasing if you like.
Possibly its done as an upward stop on interest rates. The RB has a permanent stand in the market at 90 cents (and a discount rate for certain maturities) otherwise there would be a whole pile of instantaneous capital gains.
What's your suggestion for improving the system (taking into account what PDK says because that actually trumps all).
Wolly,
A short reply.
So you can't accept that a sovereign actually cedes it's sovereignty when it is forced to borrow in order to spend in it's own fiat.
I'm disappointed when someone like yourself can't appreciate this. I can think of some examples that I'm sure will help to convince you.
Fred.......we have been through this with Parky.....if you want to be a socred 'bible' thumper...knock yourself out. If the idea had any merit...don't you think Labour would have rolled it out in an orgy of spin and BS...even Cullen knew that was a dumb arsed move. The borrowing has a cost called interest because that cost is a ten inch nail being hammered into the thick skull of any minister of finance.....without the frightening cost the fools would go berserk with the splurging. It's the same reason you shy away from borrowing heaps from the parasite bank.
Cunliffe is a clueless bugger .
Has he ever heard of the word CONTAGION?
Its when markets panic and go into turmoil and everyone is affected . Standard and Poors are covering the arses as they see the risk of contagion sweeping all smaller or weaker OECD economies .
Exactly what is John Key supposed to have done under the circumstances , and could Labour have done any better?
National inherited this mess from Labour who wasted the best years of the boom taxing everything in sight and shifting tons of unemployed goobers from the dole to sickness benefit and claiming fewer unemployed .
The private debt balloon was entirely under Labour's watch , remember the credit markets were frozen when Key came into office.
Labour also introduced the g'tee for banks and finance companies in October 2008 . National now has to pay for the SCF debacle.
The Earthquake was unforeseen and will stretch the governments coffers .
Its easy to sit in opposition and throw stones, its another matter to come up with some plausible alternatives.
The credit agency has actually said we are too dependent on farm produce.... which means we need to diversify.
Diversification means we need to develop the mining sector , we need to develop the oil and gas sector and the commercial fishing sector has not been fully exploited.
We need to sell enterprises that drain the fiscus such as rail ( Which labour bought back).
With strong regulation we could do well to offer ourselves as a base for the management of global funds and pensions, etc .
and the same one who did diddly for 9 years to correct the housing market whilst in power. Even he he has not they would have had to borrow more there would have been no sharp knives on spending and S&P wouldnt be thinking negative they would have done it....
regards
Hmmm, so we argue about the shade and how the wind alters the shade, but ultimately we are in the RED - big time. Public debt is a concern and needs dealing to, BUT, is our level of private debt as IMPRUDENT as stated? Too right it is! So which NZ agency has the logical remit to deal with such PRUDENTIAL issues? Not the same lot who use a blunt jawbone as a supplement to their little tool to jaw and jaw about property inflation while tinkering with said 'world best practice' little tool and sitting on their hands, was it?
F for FAILURE.
Maybe they needed the government of the day to remind them of their role. (Yeah right ... cue Wally.)
Fred, nice one, answer - same reason no one had/has the where-with-all to get a grip of non-tradeables inflation under the current system.
M for MADNESS.
You have to admit though that Labour paid off a lot of government debt, set up the Cullan fund and kiwisaver. Had National been in power and we had nine years of unaffordable tax cuts with government deficits like what has been happening in the states (Bush borrowed for tax cuts after Clinton had wiped off a lot of their government debt), we would be Ireland by now...
The whole national party psychy of 'We will pay for tax cuts by downsizing the government' just doesn't work - you need to fire 10s of thousands of Burocrats just to give a 1 percent tax cut!! Yes the Labour led government was overly bloated, but overall the cost of running the government does not cost anywhere near the likes of health, education, welfare, etc so cutting back on government does not save us a lot of tax dollars.
I wouldn't say I'm that much of a socialist (I hate dole bludgers as much as the next man), but I prefer slightly higher tax rates and a government that runs a surplus and saves for the baby boomer to retire than one that will give small tax cuts at any cost.
The thing is National isn't downsizing the government - they are saying they will increase spending by $1.1 billion a year.
What they are doing is hoping government spending as a proportion of GDP will fall (which means GDP has to increase by more than govt spending does). This will effectively mean govt size, as a proportion of the economy will be smaller, but govt on its own will not be smaller
Exactly ! National has slowed the rate of growth in government spending , but it is still expanding . And the economy is not growing fast enough to keep up . S&P are correct about the NZ economy , just 5 years late , that's all . The warning lights should've beamed brightly when Michael Cullen turbo-charged his spendfest , from 2005-08 .
Jimbo.....when you get Cullen in a corner ask him this: "why didn't you do something to support the RBNZ from the start of 05 to crush the property bubbles"....."was it because you did not know what to do....or you didn't want to do anything....?"
It is the gargantuan housing and rural land debts that are buggering the economy Jimbo....the bubbles in my opinion were encouraged by Labour to keep the voters happy and Labour at the pig trough. The employment at that time was riding on the bubble. As soon as the hype evaporated so did many of the jobs. The property sector will not rebound to bubble activities. Those jobs are gone.
Cullen didn't act and that is why he was a failure as a minister of finance. To say he couldn't is crap. A simple land stamp tax would have tempered the enthusiam to splurge. A capital gains tax on all property sold within two years would have helped do the same. A mortgage levy applied to loans above 70% of valuation was an easy option. Doubtless there are many other steps he could have taken....He did nothing!
Labour paid off a lot of government debt,
BS. . . . It was done off the back of 10 years of real estate credit expansion fed into a Government surplus fuelled by the banks pumping zero interest central bank funded uridashis into the NZ market.
Even Wolly would agree with this.
Now private "savings" are transferred to taxpayer backed bank deposit guarantees.
Another update in. Here is the money quote from English I reckon:
"What has changed is that the international financial markets have just become more sensitised to how much debt countries have, because of the Irish bailout and the potential for more problems in Europe," he said.
"As it happens we have one of the highest levels of external debt in the developed world, alongside countries that are getting a lot of attention now, like Portugal and Ireland and Greece."
Cheers
Alex
Wow..! an actual fact is posited upon the people by a politician...the Minister of Finance no less ,....has told an inconvenient truth on this day....oh I feel a song coming on
people get ready....there's a train a comin.....nah nah train is so cheesey
people get ready ...there's a pain a comin.....yes that's it ...pain..!
Ah sorry Alex.....it's just that with all the recent talk around here of ...same shit different day ....same hag new dress................change ...it seems is no longer a word to be used lightly.
so no.... pain it is ....I think the good Minister in a softly softly way was seeking to forewarn an unpleasant medicinal administration.....from his administration......
Well I don't care how many sweet potatoes Mr John Key grows .....I'm considering a full swing to Nuclear Amish with some of the giant strides they have made of late....it is my understanding that the wife's beard is now optional.....and two horses is no longer considered an extravagance......
I'm not a fan of labour, but Bill English blames it on private debt, but private debt has decreased over the last few years and public debt has significantly increased.
Is this a case of do as I say not as I do.
The tax cuts are the only thing that has happened recently that could have caused this downgrade, National would never admit that though, as they want to pretend they are the saviours of the economy.
The income and company tax cuts were offset by increases to GST , fuel excise , ACC levies , vehicle registration increases , ............
Who unbalanced the economy through their re-distributionist policies in the first place ?
Which party , if elected back into power , will attack the dairy industry with a super-milk-profits tax , more palatebly wrapped up as an emissions trading levy ?
So because Labour were bad it's ok for National to be bad too?
Now they'll probably go thru their usual charade of selling our assets for a quarter of what they're worth, this is probably exactly what they wanted.
It will be on the "expert" advice of treasury no doubt.
That's the ol' political Team hackery mentality at work.
Your Team must win at all costs.
When you're sprung doing something naughty, you shriek "WELL THEY DID IT TOO!!!!!!!!!11", in the hope that your no-brain fanboys will start shrieking as well and drown out everyone else.
And they usually do.
The above few comments sum up NZ and in fact the western "democracies" nicely. I feel sad and ashamed that this is what those with a brain have to live with. You lot on here are by and large clued up, so why is there not more proactivity other than blogs? If I ever come back to NZ it will be to launch a full scale attack on the wankers running the place from suburban committee level, through local, then onto central.Moaning and not taking action is not good enough, so maybe stop blogging and do something. Or use the blog as a way of taking action...I include myself in this. London is a little far away, but that is no excuse either!
Philthy,
Private debt has decreased only because it "topped out" under the last Labour government. Bubbles usually end up deflating, and people need to deleverage to get their equity back.
I don't believe for a moment that S&P would regard TAX CUTS as the reason to downgrade a nation.
Let’s make this forum/ blog – away from frustration (see today) - more efficient !
Bernhard & team, I made similar suggestions before, you have a direct link to the media and our politicians.
------
Proposal:
Why don’t you ask us regularly for questions in order to put a question catalogue together for our politicians and ministers in parliament about certain issues ?
Why not have a board on your blog for these Q & A, where bloggers also can vote for the 10 best questions ?
-------
Why are the media, especially TV so disconnected from the public/ businesses and why is the public in general so misinformed, uninterested and uneducated talking/in politics ?
Why are the media people not able to ask questions, which cannot be answered with yes or no.
Why are far too many questions not challenging enough for politicians for clear, definite answers ?
Remember media is part of the system to confuse. The media owners are the big players in the propaganda game, and have advertising revenues via other masters of the universe to protect. Rocking the boat is unlikely to ever happen again. When will people get that through their heads? The public is misinformed as a result of the above, because if they even bother to read or view news of any kind, it’s the main papers and TV1 news or Sky news etc. These are as I mentioned tabloid quality only now and not interested in informing the public. Sheeple are stupid and happy to believe what they are told, what to wear, to listen to, and to believe, its shocking to me personally.
Media people work for the big media generally so are unable to ask tough questions, as they run the risk of being cut out from any leaked info, or tid bits from the inside. Journo’s fear this more than anything in the world. So tough questions are a thing of the past. BH will not ask the tough questions because he too knows that this site if cut off from interviews etc with the "players" would suffer majorly. Bernard this is not a criticism, just reality under the current set up. You piss them off and they will not come on your site. Tough questions are like politicians of integrity and the Moa, things of the past!
Non challenging questions are the same as the sentence above – It is by design now, and you can see the system in all its callous piss taking glory played out in front of your eyes every day.
If it wasn’t so serious it would be hilarious – The joke is on those who see reality.
Try this one on English Bernard:
- Given everything you have said so far on the progress being made in rebalancing the economy, what black swan events would cause you to speed up your programme to cut govt spending and bring to an end the borrowing you are responsible for?
Mr Wild Bill : Why is NZ the only country in the world to allow investors to negatively gear to purchase investment property , yet to have no capital gains tax to counterbalance that , when they decide to sell the property ?
Do you believe that this is contributing to NZ's economy being over-balanced into property , and not into productive businesses ?
Mr Wild Bill : After the 2011 election , do you propose following your own agenda on New Zealand's economy , or are you continuing to support Michael Cullen's policies ; WFF and interest-free student loans , as two examples ? .............. Presuming that you win , in 2011 .
I think an important question I would ask is.....Minister..(or Prime if your lucky) is it possible to serve more than three years in politics without developing corrupt self serving agendas because after all the apathy that is endemic though-out our society actually hails from the very top.....?with a shrug of the shoulders you reach a point where you say well everyone else is doing it...! ...as a defence...? as a justification...? This Minister is what proliferates apathy and installs it as the Status Quo.
examples of from the top apathy.....Allan Bollard..."well what can we do"
John Key........."well what can we do"
Bill English ......."well what can we do"
Each has used this phrase in a media statement at least once in the last three months. bolly probably four times a year for the last three years.
There's a start for you Bernard .....the question will be dismissed as fiction ...and there's your denial.
Bernhard, first I would not ask questions, which parliamentarians/ media often do, which could simply be answered with yes or no. Ask questions about the Why’s, Where’s What’s and the How’s. Ask question, which allow/ challenge for definite and clear answers.
Next to many more specific (Export/ infrastructure) ones my 3 general questions to the government preferably Browlee/ Joyce are:
1. How can we reduce quality imports in order to lift skill/ knowledge and wages among our workforce ?
2 .Why is the production industry important for NZ and how can the important manufacturing sector be improved ?
3. What are the major advantages of a strong manufacturing industry ?
I also think in stead of jumping from one to another spending 10 minutes or even longer to the issue, challenging with more specific questions is more valuable. Of course this needs more media (TV) time interested in those issues.
Hopefully more bloggers can/ will contribute.
Well said Walter....I appreciate that my question would be a non starter....as it would embarrass both interviewer and interviewee ........
and that's just what I want you to think about.....you can't ask that because it's not true....or you have no proof...?
Do a poll....here's the question...Are politicians to be trusted to act in the best interests of the people..?
Your poll would be a resounding ....NO
Now the public at large accept that this is a true statement...but the kicker is...
The politicians accept that this ...is the public view of them...and that is acceptable...?
Walter in that little conundrum that occurs ....is where they (Politicians) justify their behaviour...consciously or otherwise.
Under the current and ongoing worldwide scenario many of educated Kiwis I’m sure do not tolerate our “Parliamentarian Kindergarten”. The worldwide situation has the potential to escalate, with possible severe consequences for our country. The parliament needs to take more responsibility and start to work together where ever possible/ necessary – away from “Blue and Red Corner Stupidity”.
Kunst, the way is to think very seriously about strategies to target weak electorates where people are desperate for someone different who might actually care for the constituents.
If independents can somehow find a way past the establishment, then under the current MMP system, could infact make some major changes. If only via tough questions, and could actually become the fresh air to the media by publically outing the kindergarten nonsense to the media, and speaking honestly in a way the public wants to hear. Not this continued drivel of career politician garbage.
I believe this is possible, and am very keen to attempt it sometime, and 2014 will be the likely target. For me, it is unacceptable to allow the embarrassment continue without trying to change it. Simple as that fro me, and I have asked before, who else is interested?
Meanwhile, even a columnist in the Chinese "People's Daily" has GOT IT while the experts in the "developed world" from Greenspan and Bernancke down, have not:
http://english.peopledaily.com.cn/90002/96743/7206981.html
"Another lesson taught by Ireland"
By Li Fong
He says:
"........What has caused the Irish financial meltdown? Simple and clear: Ireland is another example of housing-bank financing mess......."
Not low corporate tax rates, not an open economy. Ireland has a lot going FOR it, but almost nothing you do economically will be beneficial enough to enable you to run a nationwide house price Ponzi scheme and get away with it.
Cunliffe in Question Time today tabled the S&P report, saying it made "no mention of Ireland"
English also said he that when S&P upgraded its outlook on NZ in 2008, it was because of the Budget, however this time around the negative outlook was not because of the government's finances.
Cheers
Alex
FYI, Cunliffe wrote about the S&P move on Red Alert
http://blog.labour.org.nz/index.php/2010/11/23/sp-national-on-negative-watch-part-i/
FYI all, have added in a small exchange between English and Cunliffe at question time this arvo.
Hon David Cunliffe: Does he still maintain that the removal by Standard and Poor’s of the negative watch following his 2009 Budget was a “verdict” on that Budget; if so, does he now admit that downgrading the outlook can only be a verdict on the policies he has implemented since that date?
Hon BILL ENGLISH: To the first question, yes; in respect of the second question, no. Most people who have observed this situation are a bit puzzled. In fact, last year we had conditions where the statement that Standard and Poor’s has made might have been warranted, but most of the imbalances it refers to in the statement are better now than 12 months ago, when it lifted the negative outlook.
http://www.parliament.nz/en-NZ/PB/Business/QOA/7/d/f/49HansQ_20101123_00000003-3-Economy-Reports.htm
And also see
Cheers
Alex
FYI I've added a Bill English video on Youtube
http://www.youtube.com/watch?v=FtvGQXmb1ng&feature=player_embedded
It's an interesting summary of the government's drive to switch the economy from too much borrowing and spending to more saving and investment.
English says it's going to take time.
But will we have enough time?
cheers
Bernard
English says it's going to take time.
But will we have enough time?
No we don’t !
The Pike River tragedy is another example why our economy needs to be structured - abandoning a “Patchwork Economy” for years. Our government (incl. part of the private sector) are on a wrong path. In stead of undersigning doggy drilling and exploration deals, Mr Brownlee should send a strong signal and make sure that jobs, which causes long term health problems and great safety concern for human and environment are a thing of the past = the time of modern slavery is over.
Far more valuable for our society is:
It is time for our government to structure our economy adding new segments for full and quality employment with a wide range of decent jobs. Of course this cannot be achieved by importing our infrastructure needs + and letting down our exporters of quality widgets. We do need a strong, sustainable manufacturing industry –not cheap labour and a gigantic Drilling Property and Service industries - Mr Joyce.
Walter ....don't get so upset...learn to go with flow...this is normal in Noddy...being lied to by govt is par for the course...you have to look after number one first...forget about trying to turn Noddy into an economic powerhouse because whatever good National manage to do, the socialists will come along behind and stuff it all up again...and if not them it will be the Greens in their new colours..bright RED.
Wolly – not like in Switzerland where we come from, the way of life in this country will never produce, a power house in economics – actually one of the reason why we like it here.
What I’m advocating strongly are a number of basic, but important ingredients, which need to be working for any successful economy. Not even 15 years ago, but in today’s fast changing world our economy needs to be structured - 100% NZPure - NZtailor- made to succeed.
The current “Patchwork Economy” will fail. We need urgently new visionary ideas to change the course - for a better society.
As the event last night between North and South- Korea demonstrates the worldwide conditions can change http://www.nzx.com/markets/indices/NZ50 not only on the political, but economic, financial and environmental front very fast. Single events wouldn’t worry one 10 – 15 years ago, but today it is different, because of accumulation and speed of events - the world becomes fragile.
For a small remote country like NZ this situation has consequences. Exports businesses are becoming unpredictable. Words like protectionism, austerity, self- sufficiency are in everyone vocabulary. It seems the public in general and politicians, economists, media etc. in particular, sticking to traditional models, are extremely slow adapting to the new situation. Not having the right information, can lead in many cases to bankruptcies of private and business people – even councils and countries can default.
Considering the situation - yes our government, which allows to play “Parliamentary Kindergarten” in such conditions makes me frustrated.
Because of my 40 years of business experience, my interests and knowledge in politics and economics as a 100% independent artist and philosopher, I see business from a different view – not only $ & % and $ % - one of the reasons why I’m here.
Chill dude....patchwork can be best when it's capable of rapid colour and pattern change...who wants German rigidity and heavy duty framework when some little fart on the Korean pen can start WW3 overnight...The only ballzups we have are the housing and farming debt mountains...and the benefit system..and bloated state sector...and low incomes....and we are saddled with a sick political system and poorly educated workforce...and immigration needs to be finely tuned toward bringing in people with enterprise and capital....instead of waves of unskilled Labour party fodder.
Knock up some Kiwi patch artwork Walter!.....every one unique...stuffed with wool....flog em to the tourists....bed covers or those pancho outfits ...call em Clints!
In general people’s life isn’t in balance with nature anymore, which lead to all sorts of problems.
The pace is too high – the system tired, corrupted, especially by bankers and the blue corner – money.
New Zealand should not be like Switzerland or any other nation – New Zealand should be proudly "NZ100% PURE" - tailor- made.
.
I saw a report recently from the Victoria Transportation Policy Institute that said that Switzerland had by far the highest amount of "walking for transport" of any first world nation.
I think this is because of their long commitment to highly mixed use of land.
I love their highly localised democracy system. I think this is partly responsible for their mixed land use development patterns.
"Planning" a monocentric super city is just repeating the former USSR's mistakes. Read "The Costs of Utopia" by Alain Bertaud.
Switzerland is also one of a handful of first world nations to have NOT participated in the last round of insane house price bubbles. Germany also did not participate, which is why it is "anchoring" the EU economy in the same way that the Southern States are "anchoring" the US one.
I am not an apologist for the National Party. but excuse me, what F##$en right do Labour have to point the finger at National on this? I am surprised that English did not mention that it was Labour's policies that inflated the whole housing bubble which led to this whole massive screwed up private debt situation.
Sorry, Cunliffe, you are a bloated irrelevant arse.
Hugh - great minds think alike! I hadn't seen your 12.58 post
Labour have a lot to answer for. Savage would be turning in his grave. His Labour was not one of handing out benefits like jellybeans. His Labour was the one of helping all kiwis with the basics of life, which includes affordable housing.
He would fully support your cause Hugh
So are the great minds taking any real life action, or just patting eachother on the back? Not being funny, but you guys are more than capable, along with others who frequent this site.
Take some action, your country badly needs it. More than happy to swap idea's and contibute. I am concerned that Wallys every man for himself attidute is now the only play in town. Its what got NZ into this mess Wally, and it will allow the status quo to continue. The only person who should be allowed to decide to lose pride in their county is number one. Having my pride eroded by those in charge is making me very bloody annoyed!
Here's the reality LloydM1......if you want to bring down the horse(politically speaking) you will need to forget about ...lasso's ..tripwires....barricades...the Horse is a Pegasus you will need to infect it with white-ants and let the nature of white-anting take it's course until the beasts immune system is over-run.......unfortunately the beast has a trick in the tail whereby the white ants are assimilated and morph to become one with the horse......
It was interesting that you singled out Wally's every man for himself attitude ....without considering where that attitude stems from ...Wally was a formerly a part of the bureaucracy and I suspect he knows full well how white ants are absorbed into the ...System...before any real change is effected.
What you ask is morality before money......pride before profit....and that my friend is the stuff of revolution not lobbying.
I'm glad you have strong views about our system but the root of the problem for you me and anyone who doesn't care for ...the way it is..........is apathy......it's the white ant the horse shakes back into the community.
I heard Brian Gaynor speak on this on Mon morning and evening and he put things into perspective well. He makes a lot of sense. A downgrade warning indicates a 1 in 3 chance of a downgrade. He believes S&P are looking at small economies around the world and warning at possible future shocks. He doesn't think we are any worse off than we were 18months ago and if not slightly better. RE: Ireland, he says 90 000 houses were built in 2009, in NZ only 25 000 odd, yet we have similar populations. I also read on the weekend in a piece in the Herald that from 2005-2009 the number of houses built in Ireland doubled the total number built before 2005 (if that makes sense), hence empty houses across Eyre.
Bernard how about having Brian Gaynor come and have a chat and a coffee with you?
FYI Moody's says we have nothing to worry about, Bloomberg reports
http://www.businessweek.com/news/2010-11-22/moody-s-says-new-zealand-fi…
New Zealand’s government finances are “relatively strong” even after deteriorating over the past two years, said Moody’s Investors Service, which in September affirmed the nation’s top-grade credit score.
The country’s performance during the global financial crisis “reinforced” Moody’s Aaa rating for New Zealand, said Steven Hess, senior credit officer in New York for the company, in an e-mailed response to questions. Standard & Poor’s yesterday lowered to negative its credit-rating outlook for New Zealand, citing the risk of weaker banking finances.
“Overall the debt levels are still lower than the majority of countries we rate Aaa,” Hess said. “We see government finances as relatively strong, even though they are not as strong as they were in an absolute sense.”
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